Autonomy’s ‘will it, won’t it’ M&A dance

I knew that as soon as I wrote my updated look on which company Autonomy might buy next something would come along to diminish the value of all my hard work. 😉 I had expected it to be an acquisition, but instead Autonomy surprised me yesterday afternoon with an announcement that after being in talks regarding an acquisition for “several months,”

Recent developments within these talks have given rise to an additional opportunity that warrants further examination which could give rise to an acquisition process that exceeds our original planned time scale.

In other words, it’s not going to happen any time soon.

As an announcement it’s a bit opaque and strangely structured, coming as the second part of an announcement that also told announced its Capital Markets Day would be on Monday, November 29.

It could mean:

Autonomy is attempting to buy part of a business and instead is now looking to expand into another part or perhaps all of the business. For that to be the case ther first part must have been quite a small deal as Autonomy’s kitty is limited to about $1bn in total.

Autonomy has identified a different company that it wants to buy.

Autonomy itself has had an offer to be acquired.

This is all of course speculation. But one thing’s a bit more certain: it will probably make a dent in the company’s Q4 results, which were expected to include a boost from an acquisition that now doesn’t look like happening. Whether that means the company will miss the revised expectations it set in the Q3 call, we’ll have to wait and see.

In our report we wondered whether the company’s health care announcement, including a new product called Auminence may be used as some sort of alternative kicker in the quarter, in lieu of an acquisition. As we said, the product came out of the blue, as do many Autonomy products and appears to us to be a repackaging of IDOL with some added diagnosis checklists on top.

The shares fell 6% yesterday after the announcement came out, all of that coming late in the day as the announcement was made at 3.51pm London time. Again, that’s slightly strange timing. The shares were creeping back up this morning.

UPDATE: Autonomy clarified its statement with this Q&A:

Would it be right to interpret from today’s announcement regarding the acquisition timetable (Update on Acquisition) that the deal you are negotiating has got larger?

No, the deal remains the same size. The statement clearly refers to the timescale.

So it’s the same company, it will just take longer, which makes most sense, I guess.